M&A Mining Activity Heats Up: Americas Silver Merging With Pershing Gold
(Kitco News)- The mining sector continues to build momentum as anothermerger deal has been announced.
Monday, Americas SilverCorporation (TSX: USA) (NYSE: USAS, TSX: USA) and Pershing Gold Corporation(Nasdaq: PGLC TSX: PGLC) announced an all-stock merger agreement to create anAmericas focused precious metals producer.
According to the press release, Pershingshareholders will receive 0.715 common shares of Americas Silver for eachcommon share of Pershing.
“Based on the closing priceof Americas Silver on the NYSE American on September 28, 2018, this implies avalue of US$1.69 per Pershing common share,” the press release said. “Thisrepresents a 39% premium to Pershing’s closing price on the NASDAQ and a 39% premiumbased on the volume weighted average prices of Americas Silver and Pershing forthe 10-day period ending on September 28, 2018.”
Shares of Pershing havesurged more than 10% on the day following the announcement. Meanwhile, sharesof Americas Silver are down almost 10% on the day.
The press release said thatthe board of directors of both companies have unanimously recommended supportfor the transaction.
“This transaction alignswith our stated initiative of building a profitable and low-cost precious metalcompany in the Americas by operating and building low risk, low capital, highreturn projects,” said Darren Blasutti, president and chief executive officerof Americas Silver, in a statement.
“We are excited to announcetoday’s transaction and believe this provides a clear path to the developmentof Relief Canyon,” added Steve Alfers, president and chief executive officer ofPershing.
While Americas Silver hasmultiple producing assets in Mexico, a benefit of the merger is giving thecompany a foothold in North America with Pershing’s property in Nevada.
Currently, America Silver islooking to produce between 1.6 million and 2 million ounces of silver this yearand between 7.2 and 8 million silver equivalent ounces. The company alsofocused on zinc and lead production as silver prices have been lacklusterthrough most of the year.
This is the second major merger announcement for the mining sector madein the last couple of weeks. Last Monday, Barrick Gold Corp announced that itwould merge with Randgold Ltd. in a $6 billion all-stock deal. The new companywould have a market cap of $18 billion - making it the undisputed largest goldproducer in the world.By Neils ChristensenFor Kitco News
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